WASHINGTON-The Council of Insurance Agents & Brokers hopes that lawsuits it filed in federal court last week will overturn the nation's last remaining countersignature laws.

That's a sentiment shared by risk managers, who support reforms that bring greater efficiency to insurance transactions.

Although the laws vary, states with countersignature laws generally force licensed nonresident agents to obtain the countersignature of a resident agent for a fee before doing business in the state. The CIAB views the laws as anachronistic remnants of a protectionist era that harm producers and buyers alike.

A federal judge last fall struck down Florida's countersignature law on constitutional grounds after the CIAB sued to have it overturned (BI, Oct. 13, 2003). Nonresident agents regarded that law as particularly onerous because it required them to turn over as much as 50% of their commission to the countersigning resident agent.

The CIAB had already filed suit against Nevada's countersignature law when the Florida decision came down. The Nevada law requires that nonresident producers obtain a countersignature on most insurance contracts and pay a commission of at least 5% of the premium to the countersigning agent. The CIAB's Nevada suit has yet to be decided.

On Feb. 10, the CIAB filed suits in federal court targeting the three other jurisdictions that have countersignature laws-South Dakota, West Virginia and the U.S. Virgin Islands.

The South Dakota law requires the payment of a commission equivalent to the lesser of at least 5% of the total premium or 25% of the commission to the countersigning agent.

The West Virginia statute mandates the payment to the countersigning agent of the lesser of at least 10% of the total premium or 50% of the commission.

And the Virgin Islands forbids nonresident agents and brokers from soliciting business as well as requiring those who somehow do generate business to pay the lesser of at least 10% of the premium or 50% of the commission to a countersigning agent.

"Brokers want to add value to their relationship with corporate buyers," said Joel Wood, senior vp-government affairs with CIAB in Washington. But countersignature laws have the opposite effect, he said.

"It protects no one, it adds no value, it slows down transactions and the corporate buyer ultimately ends up on the hook," Mr. Wood said.

The Risk & Insurance Management Society Inc. also takes a dim view of the laws.

"RIMS' position in regard to this is the same as it was when the matter came up in Florida," said Janice Ochenkowski, vp-external affairs for New York-based RIMS.

"We believe that anything that makes it easier and more efficient for our members to conduct business is supported by RIMS. We think it's a good thing, and we believe it will be particularly beneficial for our members who have multiple state operations," said Ms. Ochenkowski, who is also senior vp-global finance for the Chicago-based real estate management firm of Jones Lang LaSalle Inc.

"It would be better if these jurisdictions would modernize their own laws, but in the absence of such wisdom, we'll take every legal action necessary," said Mr. Wood.